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Current market price of the share

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Reference no: EM133116468

A company has the following capital structure as at 31ST December, 2020.

 

£

Ordinary shares (100,000 shares)

7,000,000

8% preference shares ( 100,000 shares)

1,000,000

12% debentures 

2,000,000

TOTAL

10,000,000

The company has just paid a dividend of £ 5 per share and the expected growth rate 10% forever. The current market price of the share is £ 20. The preferred stock is selling at £ 105 per share.  Assume a tax rate of 30%.

Required:

  1. Component cost

Weighted average cost of capital

Reference no: EM133116468

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